A Guide to Selling Your Annuity

by Rob Phillips, CPA

If you wanted to sell your annuity, how would you do it? An annuity ensures you’re provided with a guaranteed income for a fixed number of years for the rest of your life.

Firstly it is recommended that thorough research is done in regards to who can offer you the best deal and value. Using a broker or an independent financial adviser can help you if you’re unsure if you should sell your annuity and will provide you with the best value, however with this comes charges.

Before You Sell

It is important to note and be aware that you can only sell your annuity if it’s one that is set up in your name. If you were to have a defined contribution pension that was formed by yourself and under your name, you would therefore be able to sell it.

It is also recommended to also seek financial advice and to see a financial adviser further additional guidance to help you acquire the relevant knowledge you need to sell your annuity. Generally financial advisers ask you about your finances, personal circumstances, how you feel taking risks with money and your goals with money. These questions help them to recommend you retirement income products such as, flexi access and drawdown that will ultimately help you.

In legal terms it is said that you must seek advice if your annuity pays over a certain amount per annum.

How Much Will You Receive?

When it comes to how much you will receive from selling your annuity, many aspects are taken in to consideration, such as:

  • Your Age
  • What type of annuity it is eg joint life, single life
  • How much you receive from your current annuity
  • Your health and lifestyle

As well as these aspects, a provider may also ask you for a medical report from a doctor or GP. This is requested for so that the provider is aware of your lively hood that will ultimately affect the value of your annuity. From this information being provided, you will be given a price as to how much you will be given.

How Can You Use The Money?

When you sell your annuity, the money received can be taken as a lump sum settlement of cash. If you wanted to use the money further, you could use it to buy a different type of annuity, such as joint or single. You could also buy an adjustable income with the money gained.

Tax

Before the provider pays you the structured settlement of cash they will take off the tax you owe. The cash that you take will be added to your other income methods that you may have over the tax year, such as money from work, benefits and savings.

Dependents and Beneficiaries

If your annuity has a beneficiary that continues to pay income to that beneficiary after you die you may not be able to sell it without their consent. If you don’t know if your annuity has a beneficiary, a provider can inform you of this.

With a joint annuity, you will not be able to sell the annuity without a valid agreement from the other person who is part of the annuity.

There comes a time when life’s unpredictable situations force us to look for quick cash to attend to pressing issues. It could be that you need money for medical emergencies, school fee, pay a loan, house repair or to finance a business startup. This is the time when you sell structured settlement to get that quick buck.

What is a structured settlement?

A structured settlement refers to the weekly, monthly, or annually installment one receives from his investment. A structured settlement is also called annuity. Whenever you need money, and you don’t have any other alternative, you can always sell annuity for cash.

Before you sell structured settlement, it is mandatory you what it is worth. The calculation process is more than just multiplication. It takes into consideration how long your installment will last, and the installment amount.

How to sell annuity for cash

The first step to selling annuity for cash is to look for a good buyer. This can be done online or offline. When you get one, you need to ask as many questions as you can about your how to sell annuity for cash. There are several options involved; you can sell a part of it or your entire investment. This largely depends on how much cash you need.

Before you sign the contract and release your installments to companies that buy structured settlement, it is wise to talk to a lawyer or any financial advisor. They may provide you with valuable information including giving you an insight into the company you are selling for cash to. The company should also be able to provide you with the money at the quickest time possible

Once you sell annuity for cash, know that you have no more installments to look forward to anymore unless you sold part of it. You will need to make lifestyle changes and avoid debts or buying expensive items on credit.

You might end up in the same cash crunch situation as before. Therefore, you need to make sure whatever you got from selling your annuity serves you well. If you are investing in a new business, you have to ensure it doesn’t collapse.

What if I don’t want to sell annuity for cash but need money?

When you don’t want to sell annuity for cash but need money, there is a way around that. You can go for a structured settlement loan. This is a loan given by factoring companies and use your structured settlement as the collateral.

You won’t have to go through thorough vetting to check your credit or employment history. However, you will need to go through several steps including talking to an attorney and seek the court approval first. All this process could take up to 90 days.

One final advice, when you sell annuity for cash, know one thing; you need to have a solid plan for your future days (most probably when you have retired). Otherwise, you will end up stranded with nothing to help you out.

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